Critical Strategies for Businesses in Need of Financing: How to Improve the Odds of Securing the Working Capital You Need

As corporate lines of credit have sunk to their lowest levels since the 1990s, it is more important than ever for companies (with both healthy and struggling financials) to understand how to obtain or increase a line of credit.

I was recently interviewed by Randy Myers for tips on how mid-size companies can boost their chances of securing the working capital they need. In the American Express Inside Edge article Increase the Odds of Securing a Line of Credit, Myers addresses how lines of credit may not be as easy to obtain as they were a few years ago. But with the right preparation, companies can improve their chances of securing financing they need.

In addition to getting your finances in order, it's important for companies to show a profit, even if it means paying more taxes. One of the most critical mistakes that many mid-size companies make is adopting accounting strategies to minimize net income and associated income taxes. But getting caught up in a tax-minimization mindset can backfire when it’s time to apply for credit. You accountant may want you to show some kind of minor loss because it minimizes your taxes, however this just hammers your ability to borrow money. Rather than blindly taking deductions you might want to show a nice profit one year because it can lower your borrowing costs.

For companies with less-than-stellar financials, it is vital that they take action immediately to improve their odds of getting the funding they need. They can do that by paring costs, reducing accounts receivable, negotiating better terms with vendors and taking other measures to improve cash flow and boost debt service coverage ratios.

And what if the banks won't play ball? Businesses can also seek alternative financing solutions if they don't qualify for a bank credit. Commercial lenders and other asset-based lenders will lend against real estate, inventory and accounts receivables but also against purchase orders, machinery and equipment, even intellectual property.

The cost will likely be higher than a bank line of credit, but in dire circumstances, that’s a concession some companies are willing to make. If your bank can’t refer you to a commercial lender — and most likely they won’t — consult your industry trade association or the Commercial Finance Association, which maintains a list of alternative lenders.

To read the full article and get additional tips on how your company can secure improve the odds of secruing the working capital it needs, visit American Express Inside Edge.

You can also learn more about Alternative Financing Options and how to Secure Business Loans for Working and Growth Capital.

If you would like to know more about how your business can secure the funding it needs, visit US Capital Partners, Inc. at or call (415) 882-7160.